Coffee Trade Models

In his book, James Hoffman writes that coffee trade is primarily divided into four major models: partnership coffee, direct trade, fair trade, and auction coffee.

What are the specific differences between these four models of coffee trading? In fact, you can understand them through their names, but FrontStreet Coffee will explore the specific details of these models with everyone here.

Partnership Coffee

This refers to coffee roasters purchasing coffee directly from small-scale coffee farmers, maintaining long-term buying relationships with producers. It aims to encourage small farmers to organize and import high-quality organic green coffee, establishing long-term relationships and promoting fair and just trade practices. The goal is to make coffee cultivation a sustainable and beneficial effort for farming families and communities.

Partnership Coffee is Committed to:

Thriving Import Business

In the eyes of our trading partners, our trade terms are the best choice. Our business practices are defined, documented, and disseminated to serve as a model for the coffee industry.

Prosperous Communities

We understand the basic needs of our trading partners and promote opportunities to access specific expertise to help small farmers improve their production capacity and meet their basic needs. We measure the impact of our relationships not only economically but also in terms of the overall quality of life of our partners and their communities.

Fair Trade Coffee

The coffee trade structure in most regions of North America, Western Europe, and Japan is very similar. Coffee is typically purchased from exporting countries by international trading companies, distributors, and traders. The largest roasters in Europe also have their own internal procurement companies that deal directly with origins. However, overall, roasters tend to purchase coffee from international trading companies or specialized import agents representing specific exporters from producing countries. International trade plays a crucial role in the global marketing and distribution of coffee.

Direct Trade

This refers to direct relationships between coffee roasters and coffee producers, rather than going through importers. Roasters communicate directly with producers and request samples of green coffee beans. Of course, there are real-world opportunities to establish connections, such as local cuppings, auctions, or events specifically created to connect roasters and producers. It's worth noting that many roasters want to offer a range of coffees from different origins. This would be impossible if working with only one producer. Therefore, direct trade relationships are best used as part of a procurement strategy rather than using them to meet all your needs.

Auction Coffee

Specialty coffee auctions provide an excellent forum for promoting high-quality coffee. They also facilitate direct relationships between producers and buyers and often ensure farmers receive good prices for their harvest. Coffee auctions have been used for centuries and remain a popular method for trading green coffee beans. They are sometimes also used to showcase high-quality coffee. In Latin America, auctions are most commonly used for selling specialty coffee. In most African countries, auctions are government-operated and serve as the primary method for commodity coffee trading. However, in recent years, some specialized auctions have also taken place in Africa. For example, in 2020, Cup of Excellence came to Ethiopia.